International trade is a usual suspect as a cause behind the recent rise in wage inequality...

International trade is a usual suspect as a cause behind the recent rise in wage inequality in the United States. However, many researchers do not believe that international trade is the main cause.

Briefly explain three reasons for why researchers believe trade is not the main cause.

Briefly explain how skilled-biased technological change is a more believable cause behind the rising wage inequality.

Expert Solution

Three reasons that income inequality is not due to the international trade are as follows:

A. International trades has caused economy to expand and created new jobs in the economy. So, demand of labor will increase and income inequality will decrease.

B. International trades brings investment in human capital that raises the skill level of the labor force. It leads to the reduction in wage inequality.

C. International trade brings specialization of trade and it causes reduction in the wage inequality. The trade specialization causes workers to be more skilled in a specific sector.

Skill based technological change, has two effects:

1. First effect that it makes many people out of jobs due to the structural change in technology to be used in a particular sector. It means that the supply of labor increases in the job market and these people are ready to work at lower wages.

2. The second effect is that there are few people who are well versed with the new technology. So, demand of these people will be more than the supply. Due to this imbalance, these people will work at higher wages.

As a result of the above two effects, the wage inequality will increase.

Rahul Sunny answered 2 years ago

1. Discuss the rise of international business and describe the major world marketplaces and trade agreements...

1. Discuss the rise of international business and describe the major world marketplaces and trade agreements and alliances. 2. Explain how differences in import-export balances, exchange rates, and foreign competition determine the ways in which countries and businesses respond to the international environment. 3. What are the key barriers to international trade?

Consider the role of resources in international trade. Do you believe the rise of globalization has...

Consider the role of resources in international trade. Do you believe the rise of globalization has caused the outsourcing of manufacturing jobs within the United States, or is this a natural progression due to the technological era we are in? What trade legislation has affected items that are “Made in America”?

Over recent years, researchers have noticed the effects of skill-biased technical change on wage inequality. In...

Over recent years, researchers have noticed the effects of skill-biased technical change on wage inequality. In other words, the real wages of the skill-based jobs have risen a lot. But the payment for unskilled jobs has actually been declining. What is a common measurement of income inequality? How to explain the rising inequality? For the explanations, you can present your answers in either one of the three approaches, intuitively, graphically or mathematically.

Explain why some people may think increased international trade may be responsible for increasing income inequality...

Explain why some people may think increased international trade may be responsible for increasing income inequality in the US. Use the H-O model to explain. What observable data items could be used to confirm this theory? Does the data support the theory? Briefly explain how the intuitions of the HO model can still be used in conjunction with offshoring to resurrect the trade-inequality hypothesis. Answer using 8+ sentences, Thank you

Do you think the recent increase in barriers (like more tariffs imposed by the USA on imports from China) to trade is a help or a hindrance to reducing inequality? Why?

You will typically write a 500-word (+ 50 words). One argument in the debate surrounding globalization as you have learned in units 1 and 2 materials: Chapter 1 of the textbook is about the inequality between developed and developing nations. Do you think the recent increase in barriers (like more tariffs imposed by the USA on imports from China) to trade is a help or a hindrance to reducing inequality? Why?Please take care of the word limit and answers should...

1. Explain what the expected impact of the fall in international trade on the Eurozone economy might be (exports, imports, exchange rates, poverty, income inequality). Present specific data to support your argument.

GLOBAL ECONOMICS 1. Explain what the expected impact of the fall in international trade on theEurozone economy might be (exports, imports, exchange rates, poverty,income inequality). Present specific data to support your argument.2. Why Germany is upset with Spain with respect to how Spain managed tradesurplus and government surplus money? Present specific data to supportyour argument.3. Why most European governments will experience current account deficits?Which is one of the main policies to reduce the current account deficit? Presentspecific data to support...

Question